Better than expected performance
DoubleDragon Properties Corporation (DD), being a newly-listed real estate company, didn’t disappoint its investors when it earned a surprising triple digit growth of its revenue at 349.4% amounting to P744.56 million in the first quarter of 2018 compared to its bottom line figure of P165.67 million for the same period last year.
DD’s revenue also grew to 182% with a third of this coming from recurring revenues having a 173.7% increase year-on-year. This is due to the growth of its rental income which increased by 291.9% amounting to P409.71 million compared to P104.71 million for the same period last year. The company’s goal is to have its recurring revenues account for 90% of its total revenue.
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DD performed better than it expected because for the first quarter this year, it exceeded its recurring revenue objective by P500 million. The company’s chairman, Edgar Sia II, expressed that the said growth has been due to the earlier than expected date for the realization of its projects.
As we all know, DoubleDragon is the parent company of CityMalls which owns a chain community of shopping malls. Having said, the former’s revenue was actually generated from its CityMalls. The objective of the company is to have 50 CityMall this year.
DD expects its office complex, DoubleDragon Plaza – which is the first phase of DD Meridian Park – to contribute to its recurring revenues this 2018. The good news is that it has already been leased out by 98.2% and it is expected to contribute substantially to its rental revenues this 2018. The cash flows received from its current projects will be invested of the expansion of its leasable portfolio.
DD’s target and future plans
DD plans on having 1.2 million sq. m. as a leasable portfolio by 2020 and in order to achieve this, DD’s goal is to have 100 CityMalls with 700,000 sq. m, office projects DD Meridian Park and Jollibee Tower in Manila with 300,000 sq. m., hospitality developments from its planned 5,000 hotel rooms of Hotel101 and Jinjiang Inn Philippines with 100,000 sq. m. and industrial projects from 8 CentralHub sites across the country with 100,000 sq. m. by the end of 2020.
Managing the risk
The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) just released news increasing its policy by 25 basis points to 3.25%. This interest rate hike posed a threat to different companies and therefore exposing themselves to risks. Mr. Sia, however, said that there is nothing to worry in the company itself since they have already anticipated such risk and they’re effectively handling it. Hence, in order to mitigate such risk, they opted for a fixed-rate funding. DD has ensured that they have no key maturities until 2021.
It seems that DD is performing very well in terms of realizing its revenue. It also locked in a triple digit growth which means that it has one of the highest potentials in the market. Although there’s a tight competition in the real estate industry, it certainly has room for another competitor who might equally or even perform better than the existing companies.
Technical Analysis
The technicals is still saying a different story. The stock is still in a downtrend with no reversal signals yet in sight. As this point in time it would be good to stay away from the stock first if you are a trader because the stock is still pretty much on a downward path.
Will send you updates when we see signs of reversal in play.
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